The FTSE 100 set for a quiet start to the new trading week as inflation worries bubble away in the background

The FTSE 100 looks set for a quiet start to the trading week, mirroring Asia’s main markets.

There were two rare pieces of upbeat economic news from China earlier – industrial output and retails sales beat market expectations. However, this was counterbalanced by a fall in new home prices.

After a record week for the US, French and German markets, it appears Monday will be used by traders to take stock.

And of course, the threat of rising prices – and the knock-on impact on monetary policy – will continue to be a hot topic for debate this week, as it has been for months now.

“As we look towards another week the inflation genie has so far been the dog that hasn’t barked, however, the volume over the apparent lack of urgency to rising inflation risks from central banks has been getting louder in the past few weeks,” said Michael Hewson of CMC Markets.

“While those who are saying that central banks can’t do much about supply chain disruptions and shortages of products, and as such should look through the sharp rises in prices, are undoubtedly correct in some part, that view entirely misses the very real point that monetary policy could well be exacerbating some of this upward pressure in prices.

“As such, there is scope for central banks to move monetary policy off their current emergency settings without it causing too much disruption.

“For the moment, the two sides of the argument appear to be split between benign neglect, and a sharp tightening of policy to head off inflation risk when it comes to policy settings. There is a middle ground and central bankers need to get off their collective backsides and take it.”

Looking ahead, it is expected to be a busy week for blue-chip news with updates from Royal Mail, Vodafone, British Land, Imperial Brands and SSE expected.

On the market

• Pound US1.3430 (+0.12%)
• Bitcoin US$65,789.40 (+0.42%)
• Gold US$1,859.60 (-0.42%)
• Brent crude US$81.67 (-0.50%)

6.50am: Early Markets – Asia / Australia

Asia-Pacific shares were mostly higher on Monday as retail sales in China gained 4.9% year-on-year in October, higher than the 3.5% lift predicted in a Reuters poll.

The country’s industrial output for the month also rose 3.5% as compared with a year ago, above expectations for a 3% increase.

China’s Shanghai Composite slipped 0.18% despite the positive news while Hong Kong’s Hang Seng index rose 0.04%

In Japan, the Nikkei 225 gained 0.55% and South Korea’s Kospi surged 1.07%.

Australia’s S&P/ASX200 lifted 0.36% to 7,470.1 points, with energy stocks the only sector finishing significantly lower.

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